MoMo and the Smallholder Farmer (MoMo – Mobile Money)

Oct 2, 2015 | All, Data & Tech Acceleration, Digital Financial Services

Mobile Money aka MoMo was conceived in 2007 in Kenya. Earlier close relatives in East Africa and distant relatives in Asia, such as Smart Money in the Philippines, had begun their life trek a few years earlier, but few have grown to colossal heights as the Kenyan product. Indeed with platform capacity of 900 transactions per second, an agent network of over 80,000 points, a merchant network of over 100,000 businesses approximating 10% of the total retail universe in Kenya, and with over 70% of banks and Financial institutions integrated and more than 26 million registered customers and 12 million active on a 30 days basis, MoMo is a gargantuan financial service as fascinating as the pyramids of Giza.

The name MoMo in the language of one of the largest Bantu tribes in Kenya means a “buxom woman”, a symbol of vitality and wellbeing, which seems an apt allegory for Mobile Money and its pervasive domestic remittance product and intriguing financial offsprings. From the eyes of a team of devoted enthusiasts, this series of blogs investigates MoMos’ potential entrenchment in the lives of smallholder farmers in Kenya, Tanzania, and Zambia and to discover new frontiers of financial inclusion and overcome barriers to adoption.

During a human-centric design session conducted in early August 2015 by Mercy Corps AFA program staff, in Ndumberi Kiambu county Kenya, I heard a stellar smallholder farmer mention that she keeps on average KES (Kenya Shillings) 1,000 in her purse and up to KES 10,000 in a mobile money wallet. When probed further she explained that she felt safer with the KES 10,000 in her MoMo wallet endorsing the level of trust MoMo services have earned 8 years post-launch.

This refreshing perspective from a rural smallholder warrants greater exploration of the displacement of cash by MoMo services. The potentially untapped use cases and opportunities presented by mass adoption and behavior change amongst some of the most underserved yet economically important segments of any developing country are exciting.

The kingship of physical cash is rapidly losing ground to the MoMo revolution for much the same reasons parallel dynasties lost favor including but not limited to less security, divisibility, convenience, and utility. MoMos’ grasp of the myriad needs of all strata of the population has led to rapid adoption and proliferation of auxiliary services set the stage for a true conquest of physical cash.

Our stellar smallholder farmer, however, admitted that beyond domestic remittance and money custodial services she was yet to use her MoMo account for both proximate and remote merchant payments and to my dismay even the “holy grail”, automated digital savings and instant loan products seem to have eluded her. She went further to explain that she actually boarded a Matatu (public transport) to go to the nearest town to pay her NHIF (National Health Insurance Fund) fees over the counter so as to confirm the payment was posted in her account and acquire a receipt, yet she was fully aware this could be done through her MoMo account. Perhaps she did not trust NHIF without a physical receipt.

On visiting the town where she conducts this medieval cash transaction, I stumbled on the scars of the waging war between MoMo and Cash. The town was lavishly splashed with eye-catching wall branding and point of sale materials shouting the availability of retail goods payments through MoMo, not a single wall or shop was spared. Not being one to shy from a battle scene, I took the opportunity to intercept some of the casualties to establish the battle statistics. The responses were rather surprising! In the midst of such visible presence, cash for the most part still had the day! One merchant remarked that they were not willing to share the diminutive margins they earned with MoMo. Another mentioned that since the merchandizing exercises not a single customer had asked to use the service and yet another said that he was not properly trained. In the midst of this battle, another struggle was at play. Merchants doubling as MoMo agents considered the new kid goods payments as an evil scheme meant to deprive them of CICO (Cash In Cash Out) commissions. These observations provided invaluable insights at the farmers’ peculiar behavior and subsequent actions.

All was not lost, however. There were pockets of strong acceptance led by an upgraded version of goods payments that bundled a digital working capital loan. The system uses the merchants’ 6-month transaction records on MoMo and some undisclosed algorithm, to determine the amount of working capital they could apply for and receive within 48 hours at the touch of a button. Hence the credit hungry merchants have retaliated by aggressively persuading customers to pay for goods with MoMo and since the smallholder farmer keeps up to KES 10,000 in their wallet and the service is free or cheaper than Cash Out for the farmer consumer, it has been smooth sailing.

Another interesting observation was the penetration of MoMo goods payments in the HORECA (hotel, restaurant, café, and bars) segment. Here MoMo dominated cash with over 60% of transactions settled through the system, suggesting a gapping inefficiency in physical cash payments over MoMo and a higher propensity by users to pay with MoMo a good subject for further human-centric design research.

Just like send money home was a pivotal catalyst that MoMo used to desecrate antiquated domestic remittance precursors, a similar catalyst needs to be ideated for the goods payment service. While there is some doubt that the smallholder farmer has adequate funds in his MoMo account, they do in fact have access to real-time credit from the various automated savings and instant loan products, such as M-Shwari. Is the conversion of cash-ensnared merchants to the digital fold that far off?

Mobile proximity payments offer smallholder farmers a stepping stone to financial inclusion by enjoining them in the big data ecosystems thus providing various stakeholders including financial service provider’s digital data on buying patterns and perhaps insights to customize financial services to improve their livelihoods. We welcome your views as we explore the unfolding journey of MoMo and the smallholder farmer.


Sieka Gatabaki, the Digital Financial Services Manager AgriFin Accelerate Program, Mercy Corps.